When determining the value of a claim for constructive or wrongful dismissal, Ontario courts generally will consider a number of factors (subject to the terms of the dismissed employee’s employment agreement). Those factors, known as the Bardal factors, include the age of the claimant, years of employment, degree of responsibility held in their position, and prospects for future employment. Through a review of these factors, courts determine the appropriate length of common law “reasonable notice” to which a dismissed employee is entitled.
During the pandemic, unemployment has hit record highs. Employers, whether in the service or retail industries, along with many professions, have reduced or eliminated positions. There are fewer job opportunities in most areas of manufacturing. Some jobs have changed; others, such as hosts or in-person event coordinators, have been eliminated - all as a result of the impact of the pandemic. With the widespread impact of the COVID-19 global pandemic, including on the job market, everyone has been wondering: will the courts consider the impact of COVID–19 when determining the value of wrongful dismissal claims?
As we enter the second year of the COVID-19 pandemic, a number of decisions have come out of the Ontario Superior Court of Justice on wrongful dismissal cases arising out of terminations and/or job searches in the early period of the pandemic. To date, these decisions offer little clarity on how the pandemic fits within the courts’ determination of reasonable notice periods.
Pre-Pandemic Terminations
Where an employee was terminated before the COVID-19 pandemic ramped up, but felt the effects of the pandemic in the course of their search for alternate employment, so far courts have been unwilling to account for the pandemic’s effects in notice periods. This was the case in Yee v Hudson’s Bay Company.[1] The plaintiff, Mr. Yee, had been terminated from his employment in August 2019 after approximately 11.5 years of service, and was paid 11 months’ salary plus benefits pursuant to a June 2015 contract. He began submitting applications for new employment in February 2020, shortly before the COVID-19 pandemic, and had been unsuccessful in finding new employment by the date of trial in December 2020. Mr. Yee sought 18 months’ reasonable notice, submitting that the court should consider the increased difficulty in obtaining comparable employment during the COVID-19 pandemic as part of the Bardal factor relating to the availability of similar employment.
The Court held that 16 months was the proper notice period. The Court acknowledged that economic factors such as a downturn in the economy may favour a longer notice period, but distinguished terminations which occurred before the COVID-19 pandemic from terminations which occurred after, stating that they should not attract the same consideration. Because Mr. Yee’s termination pre-dated the pandemic, the notice period ordered by the Court did not appear to account for the pandemic’s negative effect on finding comparable employment.
A similar approach was taken in Nahum v Honeycomb Hospitality Inc.[2] The plaintiff, Ms. Nahum, had been terminated without cause in October 2019, when she was five months pregnant. She gave birth in February 2020 and began searching for employment two months later, by which time the COVID-19 pandemic had begun. The parties agreed that the pandemic might reasonably impact Ms. Nahum’s job search, but that it ought not to be considered in determining her notice period because her termination pre-dated the pandemic. The Court therefore did not consider the pandemic in its analysis.
Early Pandemic Terminations
Where an employee was terminated in the early days of the COVID-19 pandemic, courts have given only minimal consideration to the pandemic in assessing reasonable notice, on the basis that the job market at the point of termination was merely “uncertain” rather than decidedly negative. This was the case in Iriotakis v Peninsula Employment Services Limited.[3] The plaintiff, Mr. Iriotakis, was terminated from his employment without cause on March 25, 2020, after 28 months of service, and was paid 4 weeks’ salary plus benefits. He secured alternative employment in October 2020, and received Canada Emergency Response Benefit (CERB) payments in the interim. Mr. Iriotakis sought at least 6 months’ reasonable notice.
The Court acknowledged that the pandemic had some influence on Mr. Iriotakis’ job search given the timing of his termination. However, the Court noted that the pandemic’s impact on the economy generally, and the job market specifically, was highly speculative and uncertain as of the termination date. Because notice is to be determined by the circumstances existing at the time of termination, the Court warned against applying hindsight to the measurement of reasonable notice. Ultimately, the Court found that the uncertainties in the job market served to “tilt” the period of reasonable notice away from the short notice period that Mr. Iriotakis’ short period of service might otherwise indicate, and held that 3 months’ notice (with no reduction for CERB payments) represented a reasonable balancing of the applicable factors.
In Lamontagne v J.L. Richards & Associates Limited,[4] the plaintiff had been terminated on February 19, 2020. The Court noted that by this time, COVID-19 cases had been reported in Asia, Europe, and the United States, and took judicial notice of the fact that the threat of a global pandemic existed. The Court acknowledged that this threat created uncertainty about the fate of the economy should a global pandemic become a reality, and took this uncertainty into consideration as part of its reasonable notice assessment.
In other cases, courts have simply avoided engaging with issues relating to the effects of COVID-19. In Perretta v Rand A Technology Corporation,[5] the plaintiff, Ms. Perretta, had been terminated from her employment without cause on March 31, 2020 after approximately 5.5 years of service, and received her statutory notice entitlement plus two weeks’ pay and benefits. Ms. Perretta submitted that an economic downturn could justify a longer reasonable notice period, and relied on prior decisions awarding a range of 7-9 months’ notice to an employee. The Court found 6 months to be the appropriate notice period, with no reference to whether the pandemic ought to be considered or given any weight in the balancing of factors.
Similarly, in Marazzato v Dell Canada Inc.,[6] where the plaintiff had been terminated on March 4, 2020, the Court declined to consider the economic downturn caused by the COVID-19 pandemic as favouring a longer period of notice without specific evidence of difficulty in finding and obtaining a new position.
Takeaways
These decisions make clear that Ontario courts are willing to consider the effects of the COVID-19 pandemic as part of their reasonable notice assessment, but the weight given or the impact on the length of notice remains unclear. Courts have not yet considered the pandemic’s impact on reasonable notice in the context of terminations that occurred well into the pandemic. This is largely due to time: wrongful dismissal cases take time to reach the courts, with the courts only just beginning to release decisions on the earliest pandemic terminations. In time, the courts will be faced with requests to consider the impact of the pandemic in the assessment of reasonable notice for those terminated at the height of the pandemic unemployment (indeed, such cases may already be forthcoming).
In the meantime, claimants in wrongful dismissal actions arising from this period should endeavour to collect and be ready to present clear evidence as to how the pandemic contributed to both their termination and job search efforts, and employers should be prepared to respond to that evidence. The cases released to date suggest that the impact of the pandemic may not necessarily be judicially recognized in the absence of evidence, but rather will require information to be placed before the court for it to consider in assessing reasonable notice.
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[1] Yee v Hudson’s Bay Company, 2021 ONSC 387.
[2] Nahum v Honeycomb Hospitality Inc., 2021 ONSC 1455.
[3] Iriotakis v Peninsula Employment Services Limited, 2021 ONSC 998.
[4] Lamontagne v J.L. Richards & Associates Limited, 2021 ONSC 2133.
[5] Perretta v Rand A Technology Corporation, 2021 ONSC 2111.
[6] Marazzato v Dell Canada Inc., 2021 ONSC 248.
